Moldova’s pro-Russian president takes first steps in new orientation

Moldova’s pro-Russian president takes first steps in new orientation
Moldovan President Igor Dodon.
By bne IntelliNews January 3, 2017

Igor Dodon, an advocate of Moldova’s tighter ties with Russia, was sworn in as president of the former Soviet republic on December 23.

In his first days in office, Dodon has already dismissed the minister of defence, Anatol Salaru (Liberal Party, PL), for his pro-Nato views and taken legal steps to cancel the bill under which the government is supposed to pay from the budget the $1bn siphoned off from the three bankrupt banks in a massive fraud that shocked the EU. He also scheduled a meeting with Russian  President Vladimir Putin for January 17 in Moscow after Russia’s deputy PM, Dmitri Rogozin, attended Dodon’s inauguration.

By the end of the month or in early February, Dodon plans to visit EU officials in Brussels, as well as the breakaway pro-Russian region of Transnistria. He has not said what is on the agenda for his visit to Brussels, but previously mentioned plans to drastically amend the economic provisions of the Association Agreement between Moldova and the EU, and implied he would push for trilateral talks with Russia and the EU for gaining concomitant access to the two free trade areas (EU and the Russian-led Eurasian Economic Union).

In dismissing Salaru, Dodon is speculating that internal disagreements within the Liberal Party (PL), the junior partner in the ruling coalition, has made it unpopular due to its rhetoric on unification with Romania. PL president Mihai Ghimpu had called for Salaru’s dismissal, but Dodon rejected Ghimpu’s proposal to nominate Valeriu Munteanu (currently minister of environment) as a replacement for the post. Instead, Dodon might come up with his own candidate, which would be an unusual step and likely to generate further tensions between the presidency and the ruling coalition. Munteanu said that the Liberals might ask for the Constitutional Court’s opinion on this.

Salaru had constantly expressed his commitment to continuing to collaborate closely with Nato as a way of modernising the Moldovan army. He went so far as to invite Nato forces to help with the evacuation of the Russian troops stationed with no mandate on the territory of the Moldovan separatist republic of Transnistria. He did not propose Nato membership for Moldova, but the drills organised on the country’s territory and over the border in Romania have irritated local pro-Russian politicians and some of the public as well.

As regards cancelling the payment of the $1bn from budget to clean up the banking mess, Dodon initiated a bill to this end, which must be endorsed by the parliament. With no majority support among lawmakers, Dodon visibly relies on voters’ sentiment to get the law throught parliament. Furthermore, an open vote in parliament in favour of the payment from the budget of the $1bn stolen from the banking sector would only depress the already low public support of the parliamentary majority, possibly triggering more street protests. The bill on the payment of the $1bn from budget was endorsed under an accelerated procedure with no direct vote involved. The ruling majority avoided the Socialists’ (PSRM) attempt to oust the government with a no-confidence vote earlier.

The president’s attempt to cancel the bill has already prompted criticism from the International Monetary Fund (IMF). “In case some commitments, needed for achieving the targets set under the programme, are being cancelled, we should evaluate whether the targets can still be achieved,” IMF resident representative Armine Khachatryan told Radio Free Europe in a written statement.

Dodon wants the $1bn (actually MDL13.6bn, which is only some $680mn at current exchange rates yet still around 10% of country’s GDP) to be repaid to the central bank out of the money recovered in the bankruptcy procedure of the three banks. The central bank has extended MDL13.6bn loans to the three banks, and the government, as a guarantor of the loans, issued bonds to return the money to the monetary authority.

Outgoing President Nicolae Timofti published a bundle of seven laws on the banking sector, including one stipulating the payment from public money of the $680mn (10% of GDP) emergency aid to be given to three bankrupt banks on October 4.

Moldova’s ruling coalition summoned lawmakers at short notice on the morning of October 3 to vote on the no-confidence motion submitted against the government over its plans to rush through the package using emergency procedures. Government MPs then boycotted the meeting, thus rejecting the motion and thwarting opposition plans to stage a demonstration outside the parliament. As a result of the motion being rejected, the bills were de facto endorsed by lawmakers.

The IMF had required Moldova to tackle the issue, as well as fiscal consolidation and banking sector regulations, before discussing its three-year programme with the country in October.

Dodon won a landslide victory against the pro-EU opponent Maia Sandu on promises of restoring the preferential relationship with Russia and eradicating the corruption that reached endemic proportions during the ruling of pro-EU coalitions since 2009. Eventually, this will boost growth and the standard of living, he promises. But as president he has not many powers against the parliamentary majority wish of a pro-EU orientation.  The ruling coalition formed last January around the Democratic Party (PD) of the largest Moldovan oligarch Vlad Plahotniuc abandoned the presidential race and ironically backed Sandu – the majority’s most vocal opponent.

One of Dodon’s main instruments, besides the power to rely on voters’ support including by public referenda, is his party, the Socialist Party PSRM (the largest parliamentary party), which has once again set a target for holding early elections in 2017.